Mobi724 Global Solutions Inc

XTSX:MOS

Earnings Call Transcript

[Marcel Vienneau, CEO, President, Director & Co]

My name is Marcel Vienneau. I'm the CEO of Mobi724 Global Solutions. Thank you for joining our Q2 2021 financial release webinar.Please note that comments made on today's call, information, by its nature, is subject to risks and uncertainties. Actual results may differ materially from the views expressed today. You can read about these risks and uncertainties in our filing on SEDAR.Mathieu Laurin, our CFO, will present the financial results. And we will make ourselves available for questions at the end of the presentations. [Foreign Language] We do have a PowerPoint online right now to facilitate the presentation.Mobi724 is a fintech company that provides insight and intelligence to every payment card transaction to generate additional business opportunities for banks and merchants while creating more meaningful purchasing experiences for customers. Our goal is to establish a proper foundation in order to position our business for future growth and success, and we continue to do that in the second quarter of 2021. During the quarter, we made significant progress raising brand awareness amongst the large payment processing networks in our target market of Lat Am region.We also improved our capital position by closing on the first tranche of a loan of $1.15 million for a maximum amount of $2.3 million from the government of Quebec and a private placement of $845,000 for a total of $2 million. Improving our capital structure is important because it will allow us to quickly pursue opportunities as they arise, ultimately helping us to achieve our goal of being the partner of choice for banks and merchants, which is how we plan to grow our company.Let me explain further. Mobi724's growth strategy is focused on partnering with the large digital payment acquiring or processing networks, which enables visibility on qualified consumer transactions in real-time. This visibility allows us to offer unique real-time payment-driven digital experiences to cardholders, which creates transactions that are both profitable to the banks and merchants as well as engaging to the customers.At present, the payment transaction industry has many inefficiencies, which include the following: first, card issuers do not extract full value from purchase history, leading to lost sales opportunities and lost revenues. Second, merchants have poor ability to access and use customer insights, which is inefficient, leads to decreasing loyalties and more lost sales opportunities. And finally, consumers lack access to easy redemptions and relevant offers, which leads to unused loyalty or reward points because of a general lack of awareness of what stores to frequent for potential saving opportunities.Mobi724 AI-enhanced predictive analytics capabilities can help address all these issues. Our solutions concentrate and monetizes the enriched consumer transactional history for the benefit of all stakeholders within the network. Our processing platform enables new ways to pay using payment cards and new seamless and interactive all-digital experiences, thus driving more usage of payment cards and higher spending rates. Our product offering is fully aligned with the business models of payment card issuers and of processing networks.With that, I will now pass it over to our CFO, Mathieu Laurin for a review of our financial performance during the second quarter.

[Mathieu Laurin, Chief Financial Officer]

Thank you, Marcel. Good evening, everyone, and thank you for joining the call.We are comparing the same period year-over-year and quarter-over-quarter comparison. Let's look at the results for Q2 2021, Q2 2021 compared to Q1 of 2021. Improved capital position by closing on the first tranche of a loan of $1.15 million for a maximum amount of $2.3 million from the government of Quebec and a private placement of $845,000 for a total of $2 million.Revenue was $158,000, which was an increase of 15% compared to the same period last year and a quarter-over-quarter decrease of 18%. Operating costs of $882,000 increased by 23% compared to the second quarter of 2020 and increased by 1% quarter-over-quarter. Net loss of $1.01 million increased by 61% compared to the same period last year and increased by 4% quarter-over-quarter. Our cash and cash equivalent position was $1.26 million as at June 30.In Q2 2021, we continue leveraging various Quebec and federal government help programs which remain available for businesses to mitigate the pandemic crisis. As Marcel mentioned during his remarks, we improved our capital position by closing on the first tranche of a loan of $1.15 million or a maximum amount of $2.3 million from the government of Quebec and a private placement of $845,000 totaling $2 million. We thank all shareholders for your ongoing support.Marcel will provide a business overview and the outlook.

[Marcel Vienneau, CEO, President, Director & Co]

Thank you, Mathieu.The significant momentum we generated in the first quarter is carried into the second quarter. We are making progress on establishing pan-regional connectivity to transaction processing networks. The new company's business partners include VisaNet Guatemala, the leading payment network in Central America; and Prosa, the main network in Mexico. Integration processes to these networks have commenced. We expect completion in the near future. Other integrations and partners are being worked on. We are building the most unique network to become the Lat Am regional aggregator of all real-time offers and rewards linked to payment cards with a market potential of over 1 billion-plus payment cards. This was started over 24 months ago, and we expect to reach more than 75% in the next 15 months.Through VisaNet Guatemala and Prosa, we gain the visibility across Mexico and Central America for transactions from global payment card brands and domestic brands issued by local and international banks, including Visa, Mastercard and local brands like Cardnet for Mexico. Prosa is 1 of the top 10 processors in the world, and we are very excited to monetize our technology in partnership with such large brands. Prosa has over 60% of the Mexican payment transaction market. Both agreements with VisaNet Guatemala and Prosa are expected to accelerate revenue generation for Mobi724 and drive growth and strategic value for the company.We continue to advance others to further expand our unique connectivity network. The incorporation of Mobi724 Mexico, a wholly owned subsidiary of Mobi724, was completed in early 2021. This expands and facilitates the company's scope of operations in Mexico. We are currently working on new agreements in Mexico, and we expect that some of these developments can be finalized in the near term.In Chile and Peru, we work with our partners to acquire commercial accounts with some of the largest brands in the payment card space. We are making progress. Through our co-marketing agreement with Visa in Latin America, we work with support of Visa teams across the entire region. Mobi724's platform is integrated to the Visa Offers Platform, which gives us visibility on qualified transactions in many countries globally. We continue implementation with CGI under the agreement that was signed last year.In summary, our pay-per-performance business model is especially relevant in today's environment as sectors globally adopt digital services to focus on efficiency and create a frictionless and all-digital consumer experience. Our payment-agnostic functionality bodes well into this new reality, and we are pursuing opportunities in keeping with prevailing market conditions. We're progressing on our road map to build the leading aggregator of offers and rewards network in the region to further integrate with payment networks across Latin America, which is becoming one of our unique differentiators in enabling the delivery of real-time digital experiences to the cardholders of our payment card issuers. We are very enthusiastic about the future of the company and expect continued growth in the second half of this year.We have received questions before the call that I will address now. [Foreign Language] After I have answered the questions that were received before the webinar, we will take a 2, 3-minute pause and then review the questions that are coming while the webinar is taking place, and we will answer those questions after a 2, 3-minute pause. So now I will address the questions that have come before the webinar.

[Marcel Vienneau, CEO, President, Director & Co]

So the first question is, at your AGM, you describe having multiple opportunities in the pipeline regarding upcoming bank deals in 2021. How many deals are you looking at and when can we expect these deals to close? What has been the delay to this point?Our goal is to establish a proper foundation in order to position our business for future growth and success. As such, we consider all opportunities carefully before proceeding. That said, we have a robust pipeline with several opportunities at various stages of development. We expect to close our next deals before year-end.Second question, once you sign with a partner, how long does it take for the relationship to start to generate revenues?It depends on the client type, whether it's a card issuing bank, a payment network, onboarding entails a detailed understanding of their requirement, sometimes a few customization points of the solution and then implementing it across their organization. On average, we expect to see revenue flowing from these new projects after 90 to 120 days.Is Mobi724 still on target to be EBITDA positive in 2021?While we won't provide specific guidance, we will say that we remain confident in the company's growth trajectory into the back half of this year. And as we engage new opportunities and start to generate economies of scale, we expect more of that revenue growth to migrate to the bottom line.How long, question #4, how long will your current cash last?Our current cash, capital position is strong. We just closed on the first tranche of a $1.2 million out of a $2.3 million loan from the Quebec government and completed a private placement of $845,000 like I mentioned during the webinar. We will keep our current cash on hand to allow us to quickly pursue deals, opportunities as they arise.Question #5. Is the Lat Am region your first priority and where you expect to see widespread adoption of Mobi724 offering or is Lat Am a stepping stone to break into North America? Are you targeting any other region?We're progressing on our road map to build a leading aggregator of offers and rewards network in the region of Lat Am, which is our Phase I focus at this moment. And we will advise on Phase II at a later stage.Question #6. Can you speak to Mobi724 North American operations, specifically if a North American merchant network has been created and to what extent?As I mentioned in the previous question, our focus is on the Lat Am region across all different countries.Question #7. The Latin American region has been one of the most hard hit in terms of COVID-19. How has this affected the timing of your rollout?In the past 6 months, I believe that we have continued to gain traction with multiple deals. And we expect the revenues to continue to accelerate, but it is very, very difficult for us to qualify the COVID-19 impact. As we are all aware, it is constantly changing. So right now, it is hard to predict what the future holds. But the only thing that I can say at this moment, from the last 6 months since January, we are at the best position we've ever been in over the past 15 months. So that's positive by itself. And hopefully, the COVID will continue to stabilize over the next few quarters.What are the immediate, question #8, what are the immediate priorities of your new Chief Revenue Officer, find new opportunities or move the current ones to completion?As CRO, Mr. Armando Calvo Chico will lead Mobi724 sales strategy and oversee the company's global sales performance. This is a broad mandate and his immediate priority is to accelerate the closing of the solid sales pipeline that we have across the region so we can quickly monetize, so that we can as quickly as possible monetize the true potential of our sales pipeline.Question #9. Your offering seems unique and a no-brainer for any payments company to adopt. What are the hurdles you face in acquiring more customers?Our product offering is fully aligned with the business models of payment card issuers and of processing networks and uniquely offers them a way to increase both revenues and customer engagement. However, introducing new technologies sometimes takes time, particularly with regulated industries with entrenched practices. Our solution constitute a show-me story to some extent, and I expect that we will build a critical mass of customers, we will begin to see significant adoption. And then compliance validation and legal are the most challenging steps to closing deals.What guidance, the 10th question and the last one before we take a pause. What guidance can you provide for the back half of this year and into 2022 on what shareholders can expect to see for the company?We expect revenues to accelerate in Q4 as we have mentioned in the last 3 webinars. And up to now or I would say in the previous 2 quarters, including this one and Q3, I had mentioned during the previous webinars that our revenues would be more stable. And as you can see, in spite of that, we have increased our revenues. And we had mentioned that our revenues will start to accelerate in Q4. And throughout 2022 and today, we maintain this visibility on the outcome of the company moving forward.So now I will take a pause, a 3-minute pause and check if there are other questions. [Foreign Language] We should be back in the next 3 minutes. Thank you very much for your patience.[Foreign Language] I just want to say that the questions that were received were similar or the same as the questions that we already had received prior to the webinar. I want to take this opportunity to thank a few investors that have taken the time to send us their constructive feedback. We really appreciate all feedback that we get from our investors. Should any of you have any further questions following the webinar, you can send your question to the IR address and we will promptly address the questions that we have received.[Foreign Language] I think everybody understands that in the COVID situation, unfortunately, predictability, stability are not factors, unfortunately, at this time that we are experiencing. So we are, the company is making progress in light of these challenges. I just want to take note and mention that we all know that COVID cases are accelerating throughout Canada as a whole. I want to express that everybody should get vaccinated. And at the same time, we ask everybody to be cautious. And thank you so much. If you have any other questions, please forward them to our IR address and we will promptly get back to you. Thank you very much. [Foreign Language] Have a great evening. [Foreign Language]